Manila Electric Co., the country’s biggest power distributor, on Thursday assured its customers that it would be able to reduce the generation charge, the largest component of a power bill, by an average of 18 centavos per kilowatt-hour in 2013.

In a statement, Meralco said that after extensive negotiations, it was able to forge new supply agreements with power-generation companies, allowing it to replace its existing transition supply contract with state-run National Power Corp. (Napocor).

Meralco’s contract with Napocor will expire on December 25.

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“We leveraged on our large customer base to hammer out the best deal with the power generation companies for our customers,” said Alfredo S. Panlilio, SVP for customer retail services of Meralco.

Meralco, Panlilio said, hopes to secure the Energy Regulatory Commission’s before its contract with Napocor expires.

“We are also working with Napocor to extend a portion of the TSC for such capacity that was not covered by our new power supply agreements, and we are hoping that this TSC extension will be finalized soonest as this will result in lower and more stable generation cost in 2013,” he added.

The new power supply agreements, together with Meralco’s other bilateral contracts, will account for about 95 percent of the requirements of Meralco customers in 2013. The remaining 5 percent will be sourced from the Wholesale Electricity Spot Market (WESM).

Panlilio explained that the contracts would allow Meralco to reduce its exposure and vulnerability to the volatile power prices at WESM, especially during peak periods from 11 a.m. to 3 p.m.

The average blended power rates from Meralco’s existing and new power supply contracts are expected to reach P5 per kilowatt-hour (kWh) next year and in 2014; P5.04 per kWh in 2015; P5.07 per kWh in 2016; P5.08 per kWh in 2017; P5.10 per kWh in 2018; and P5.13 per kWh in 2019.

These rates are still much lower than the P5.65-per-kWh rate offered under the company’s existing transition supply contracts with Napocor.

Also on Thursday, Meralco said that it would be offering “POP,” or “peak/off-peak,” program to large corporate customers including those inside export processing zones.

According to Panlilio, the POP program is an alternative rate option for customers enrolled under the Meralco-Napocor Time-of-Use (TOU) program and Ecozone Rate program. The POP program is meant to boost the competitiveness of Philippine industries.

“We were advised that the Napocor TOU and Ecozone Rate Program will not be extended after December 25. Thus, Meralco is proposing to update the pricing of its existing TOU program to be called ‘POP’ … which promises to be even more beneficial to our customers,” he said.

The proposed POP rates are expected to generate as much as 10 percent in electricity savings for customers whose minimum monthly consumption averages 500 kWh a month.